Lord Howarth of Newport: My Lords, it is my privilege to welcome the noble Baroness, Lady Deech, to our debates and to congratulate her on her maiden speech. I was fortunate enough to hear her address the All-Party University Group a year or two ago, when she was elegant, funny and wise. I said to myself that if she made half as good a speech today as she did then, we were in for a treat. We have had a treat and we look forward to many more.
	The vice-chancellor of Cambridge pointed out in a recent address that the influence of Government stretches back to the very beginnings of that university, almost 800 years ago. In the annual commemoration of the university's benefactors, she said:
	"The sonorous prose of the form of commemoration can be read as long saga of government influence".
	If there has been anything like a golden age of university autonomy, I suppose it was in the 1960s and 1970s, as the noble Baroness, Lady Deech, suggested, when Westminster and Whitehall were willing to fund adequate salaries, rather generous levels of student support and the expansion of the university system on a kind of welfare state model, but did not otherwise interfere or ask much, and allowed universities to be what academics still dream about: independent creators and disseminators of knowledge and ideas.
	Those two decades were exceptional in the history of British universities. Why have things changed so much? Why, in particular, have universities become so beset by bureaucracy? The scale of the Government's engagement with universities has grown alongside the enormous increase in the size of the sector, and the Government's financial outlay. In 1981 there were still only 46 degree-granting institutions; today there are 132 higher education institutions funded by HEFCE and 170 further education colleges providing higher education. The Government's outlay on higher education in England is more than £7.5 billion. The Government certainly have a duty to seek value for all this money.
	We happen, probably unfortunately, to live in a time when audit has become a cult. A university is audited by internal and external auditors; if it is regarded as a "low-risk" institution, it will also be audited every five years by HEFCE. This audit, it is fair to note, is the new, improved "HEFCE-lite" version—an audit of procedures only, under HEFCE's new audit code of practice. If it is an institution of financial risk, it will be audited a lot more often and more thoroughly, which must be right. Audit by HEFCE is far from being the end of the story. A university medical school can expect to be audited by the Quality Assurance Agency, the NHS and assorted royal colleges, each with different procedures. A university education department will be audited separately by the QAA and Ofsted. If a university offers higher education in a further education college it will be audited by the QAA, Ofsted and the Adult Learning Inspectorate. Why, I would like to ask my noble friend the Minister, could the QAA not do the lot?
	The Government want a great many different things from universities. They want universities to educate, of course, to develop the potential of individual students; to remedy the effects of class division; to socialise young people and instil civic values; to promote technology transfer, economic productivity and regional development; to produce a trained and qualified workforce, fit to compete in a global economy; and to carry out research into foreseeable social and economic utility, as well as basic research. The Prime Minister has reportedly suggested that universities will be to the 21st century what coalmines were to the 19th—and nobody now suggests that they should not have been regulated.
	There is also an old-fashioned view, which happily the Government do not disown, that universities should preserve, develop and transmit our culture. Problems arise; these manifold purposes for universities are intentional. Moreover, since universities are, in principle, autonomous institutions, the state has no power to plan their activities. The state has, by fits and starts, developed a tortuous system of carrots and sticks to get the universities to do the things it wants them to do. When the Lambert Review of Business-University Collaboration was published in 2003, it reported that HEFCE was running between 40 and 50 separate funding initiatives on behalf of various government departments.
	Lambert criticised the constant layering of new initiatives on top of old, often unco-ordinated across government departments and agencies. He also found that the financial margins of universities were so tight that they had no option to chase every available pound of funding, but that with each new funding stream came new regulatory burdens.
	Are universities private bodies, public bodies or put-upon hybrids? They are regulated as though they are public bodies. An instance is the application of freedom of information legislation to them, necessitating the hiring of additional archivists and administrators. FoI legislation does not apply to housing associations, which might equally be regarded as public bodies. Why, therefore, does it apply to universities? The European Union regards universities as emanations of the state, so that, for example, under the procurement directive, if a university wants to appoint internal auditors, it must advertise Europe-wide, I am told, to obtain five quotes. The cost to a British university of protecting intellectual property in Europe is four or five times that in America.
	Our universities are also regulated as private bodies. New accounting standards that apply to plcs also apply to universities. Universities in Britain are batted between governmental dirigisme and market pressures. The Government impel universities towards a market model in some respects, but not in others. The 2003 White Paper spoke approvingly of HEFCE insisting that certain elements of annual grants should be tied to human resources strategies that reward good performance. The White Paper went on to say, somewhat brutally:
	"This process has successfully kick-started the modernisation of human resource management in higher education".
	This would seem to mean more procedures to measure what academics do, leading to wider differentials in pay. Whether this will prove divisive and demoralising, or rallying and invigorating, time will tell. On the other hand, the Government have denied universities the right to test the market in fees.
	It is striking that there is little evidence that the growth of public regulation has fortified the sense of public mission within universities. My noble friend Lord Giddens touched upon this. British universities seem increasingly to espouse an atomised concept of the public interest. Students are now largely perceived, both by themselves and by universities, as customers of a service industry.
	It is not only the DFES and its surrogates that regulate universities; the Department of Trade and Industry, via the Office of Science and Technology and the research councils, the Department of Health, and the Office of the Deputy Prime Minister via the regional development agencies all provide funds, purchase services and regulate and otherwise make claims on universities. Consultation documents from a plethora of departments, including the Treasury, rained down on universities in 2003 and 2004. The Government do not appear yet to have procedures to regulate their own regulatory incontinence.
	The problem is recognised by the DFES and HEFCE, which have committed themselves to minimising accountability burdens. The Orwellian-sounding Better Regulation Task Force made a useful study that led, among other benefits, to a less aggressive and burdensome modus operandi by the QAA. The Lambert review made sensible recommendations for differential and more proportionate regulation based upon risk assessment, so that not all institutions should be subjected to the regulatory treatment judged appropriate for the worst, and HEFCE has been pursing this course. Following the débâcle of the last research assessment exercise, when the Government failed to fund the implications of the vast process that universities had undergone, the Roberts report put forward recommendations for a less labyrinthine and exhausting procedure in future RAEs. In recent years, letters of guidance from the Secretary of State to HEFCE have been less detailed and prescriptive. HEFCE has converted a number of bidding programmes into formula funding. Sir Martin Harris has allayed many fears and principled objections by forswearing bureaucracy in the new Office of Fair Access. HEFCE commissioned studies of the bureaucratic burden by PA Consulting in 2000 and 2004, as the noble Lord, Lord Norton, reminded us. PA Consulting found that in those four years there had been a reduction of 25 per cent in the overall costs of meeting accountability demands on institutions. It is fair to acknowledge that that is substantial progress.
	The recently established Higher Education Regulation Review Group (HERRG) has giving added momentum to the drive to reduce bureaucracy. But bureaucracy fights back hydra-headed. The cost of accountability was found by PA Consulting in 2004, as the noble Lord reminded us, still to be £211 million, equivalent to the cost of running two large universities. Just as HEFCE has agreed to five-year audits and is consolidating its dialogue with institutions into a single annual, regulatory conversation, the OST demands that institutions produce 10-year plans on finance, capital, human resources and maintenance of estates. The new Higher Education Innovation Fund is to be allocated not on a formula but, at the OST's insistence, on a competitive bidding basis which PA Consulting finds entails costs that are two and a half times higher than other competitive funding schemes.
	What is to be done about the Higher Education Statistics Agency (HESA)? I declare an interest, or at least I ask for a previous offence to be taken into account, having had responsibility for the 1991 White Paper which proposed that arrangements should be made to generate a greater coherence in statistics. We thought that was an innocent ambition. We now have every university putting in data returns for every member of staff once a year. That does not have to be done by schools, the NHS, the Civil Service or the armed services. HESA's Destination of Leavers from Higher Education Survey surveys every full-time leaving student and every part-time leaving student. Can one not get perfectly acceptable data by surveying, say, one in 10? Departments and agencies seemed to requisition statistics through HESA at whim. The Information Management Task Group for higher education has a lot more work to do.
	No one appears to be in charge of HESA. I think it is owned formally by Universities UK, but why do the vice-chancellors, through Universities UK, not insist on restraint and good sense? It is not only the regulators who are at fault; many of the bureaucratic torments of academia are self-inflicted. The recodified statutes and congregation regulations of the University of Oxford add up to 175 pages in the Oxford University Gazette, two and a half of which recite the vice-chancellor's regulations on academic dress.
	The rearguard action continues against the new vice-chancellor's proposals to bring the governance of Oxford University into line with good practice across the globe. The RAE causes little to change, but the system which costs £7.75 million, annualised over six years, continues because academics, and not just those in the universities that always win, want it to continue. Universities cope with regulation and as the noble Lord, Lord Giddens, suggested, some regulation has improved some performance. Many academics are bureaucratic adepts. I once attended a local branch meeting of the National Federation of Self-Employed and a man explained to me that his way of dealing with the Government was to stamp each form that arrived with the words "not understood" and return it to sender. That alibi is not available to academics who are, by definition, clever people.
	Vice-chancellors, pro-vice-chancellors, registrars and human resources directors can handle the paperwork, but at a cost. Expensive new posts are created in institutions that are under-funded to respond to external accountability demands. Whereas, all too often, academics are not sheltered from those pressures, a toll must be taken on the quality of teaching and research and the academic profession becomes less attractive to the recruits that it needs. We still have wonderful universities, but they are defying gravity.
	How can we go further in remedying the problem of bureaucracy? I suggest universities need to demonstrate that their corporate governance and their information and financial control systems really are good to remove the excuse for stifling oversight. Universities should not protest indiscriminately, for example, about strengthening the procedures for risk management which should lead to a lightening of overall regulation, or about the move to full economic costing, which should result in their being paid something more like the true costs of research commissioned from them. As the noble Baroness, Lady Deech, said, government needs to be more willing to trust the universities. In his retiring oration as vice-chancellor of Oxford University in 2004, Sir Colin Lucas remarked, sadly, that government regulation has been articulated so visibly in a spirit of distrust of the universities.
	The Government must find ways to rationalise, co-ordinate and moderate their impositions on universities. There should be impact assessments of all proposed new regulations—individually and in combination. Their authors should be identified and rogue departments should be corralled. Somewhere in government there should be a power to stop new regulations in their tracks. The HERRG or some such body should be maintained on a permanent basis, although there is some doubt about whether that is to be so, to carry out sceptical invigilation of regulation. Bureaucracy will always be with us, but the Government should make the price that they levy more worth paying by making policy and regulation more stable, funding universities more generously and allowing them more freedom.